Stock Market Participation and the Internet

Theory indicates that frictions (e.g., information and transaction costs) could account for the lower than expected stock market participation rates. This paper examines the hypothesis that there has been a fundamental change in participation and links this change to the reduction of these frictions by the advent of the Internet. Using panel data on household participation rates over the past decade, the results show computer/Internet using households raised participation substantially more than non-computer using households. The increased probability of participation was equivalent to having over $27,000 in additional household income or over 2.5 more mean years of education.


Subject(s):
Issue Date:
2006
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/127044
Total Pages:
31
JEL Codes:
D14; G10
Series Statement:
WP
2006-10




 Record created 2017-04-01, last modified 2017-08-26

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